The rate of decline in premiums for individual home and motor insurance is slowing down after three years of reductions.
The findings were revealed in the latest Insurance Price Index from the British Insurance Brokers’ Association (BIBA) and Acturis that tracks £5billion of actual premiums paid annually via insurance brokers since 2010.
Graeme Trudgill, BIBA’s Executive Director, said: “Our index for insurance bought by individuals shows that consumers have been enjoying reducing premiums year on year since 2012. For private car insurance the industry has benefited from the legal reforms that have been put in place to help curtail spiralling claims costs and in household despite the floods of 2014, there has been an absence of major weather events in the last 12 months helping to keep premiums low. However, the index reveals the rate of reduction is slowing with the last two quarters displaying a lower than 1% reduction in premiums.”
Kevin Kiernan, Head of Motor and Personal Lines Underwriting Services at Ageas also believes prices may be turning, adding: “We’re starting to see evidence of a much needed upward trend in motor prices and moving forward, it will be important for the industry to manage customer understanding of the upward trend in car insurance premiums, especially when they’ve been so low in the last few years.”
Conversely, the latest figures show that premiums in the small and micro business sectors are continuing their downward trend with the percentage premium reduction compared to the same period last year approaching double figures in quarter two, 2015. Steve White, BIBA’s Chief Executive, explained: “This shows the competitiveness of the market for small business insurance, and is obviously good news for often hard-pressed SMEs. Van drivers in particular are continuing to benefit from supressed rates with quarter two figures showing a huge 13.9% reduction in premium compared to 2014.”
Theo Duchen, Co-CEO of the Acturis Group added “Acturis and BIBA have developed indices that represent the key insurance buying segments and provide a unique insight into ongoing premium trends net of IPT.”
However, all segments may find their insurance costs rising by the end of 2015, as the 58% increase in IPT from 6% to 9.5% takes effect from November. Trudgill concluded: “The indices show that in many areas insurers’ margins are squeezed and they will be unable to absorb this additional tax on premiums which will be borne by their customers. This study will enable us to closely monitor the position from the end of 2015 onwards.”